Common sense from courts

Bitcoin fraudsters always pretend their schemes are decentralized and uncontrolled. Two different courts applied common sense to this criminality.

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First, Coinbase is trying to argue that DeFi networks are simply a form of speech, since they don’t have a central controller, so they don’t need to register as securities. Courts haven’t issued a final decision on this nonsense yet, but the lie is instantly obvious. Each DeFi network is started by investors who hire programmers to write the code. The investors put money into the project and expect a big return from the suckers who participate. This is no different from any stock-trading process where investors put money into a concept, hire accountants and traders to write the contracts, and expect to make money from the suckers who participate. A paper contract and a software contract are the same thing in different formats.

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Second, the Tornado Cash money laundering scheme tried to argue that it doesn’t “control” the bitcoins inside its tumbler, so it doesn’t need to register as a money-transmitting company.

This is silly. Specifically, gangsters always create networks of shell companies to hide their control. Law enforcement knows how to analyze those networks. More broadly, banks don’t control the money that moves between checking accounts. When I write you a check on my USBank account and you cash it at your Wells Fargo account, no money actually moves from USBank to Wells. The banks don’t control the money that moves from me to you. Instead, both banks participate in clearing houses where the net gains and losses from all accounts are balanced out at regular intervals. This is the same concept as a money tumbler.